FDI.L Share News (FDI)

(Adds detail.) By Jason Douglas Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Diamond miner Firestone Diamonds PLC (FDI.LN) Wednesday said it agreed to acquire peer Kopane Diamond Developments PLC (KDD.LN) for GBP52.7 million in shares, in a deal that brings together assets including Firestone's mine in Botswana and Kopane's Liqhobong project in Lesotho. Firestone said its directors believe Liqhobong to be one of the most promising diamond projects in the world, and potentially one of the top three not yet in development. Liqhobong, located roughly 120 kilometers from the capital Maseru, is 75% owned by Kopane and 25% owned by the Lesotho government. It has a resource of 90 million metric tons containing 31 million carats but has only been producing on a small scale so far. Firestone said bringing Liqhobong into full production will allow it to significantly expand its production base, which is currently focused on BK11, a mine in the Orapa region of Botswana that began production earlier this month. Firestone added putting the two companies together would allow the enlarged firm to trim costs by sharing corporate and technical support services. "The Firestone board believes that the acquisition of Kopane by Firestone will improve Firestone's prospects and enable the enlarged group to become one of the leading mid-tier diamond producers, with the potential to produce in excess of 1 million carats per annum," Firestone said. Firestone is offering 0.4657 new shares for every 1 Kopane share held. Based on a Firestone share price of 36.5 pence, the offer values Kopane at 17 pence a share, or GBP52.7 million. The offer represents a premium of 33% to Kopane's closing price Tuesday. The acquisition would require Firestone to issue roughly 140 million new shares to Kopane shareholders, who would end up with more than half of the company. Shareholders at both firms must approve the deal, and at 1406 GMT, shares in Firestone were 3.75 pence or 11.4% lower at 29.25 pence, while Kopane shares were flat at 12.75 pence. Firestone said shareholders with 36% of Kopane and investors holding almost 30% of Firestone have agreed to back the deal. -By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; jason.douglas@dowjones.com (END) Dow Jones Newswires July 21, 2010 10:13 ET (14:13 GMT)